<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (date of earliest event reported): July 30, 1996
DIGITAL TECHNOLOGIES MEDIA GROUP, INC.
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-9311 87-0269260
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification
incorporation) Number)
955 South Virginia Street, Reno, Nevada 89502
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (702) 786-2144
Miller & Benson International, Ltd.
23548 Calabasas Road, Suite 203, Calabasas, California 91302
-------------------------------------------------------------
(Former name or former address, if changed since last report.)
Total sequentially numbered pages in this document: ___ .
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
(1) Audited Financial Statements.
(i) Independent Auditor's Report.
(ii) Consolidated Balance Sheet as of December 31,
1995.
(iii) Consolidated Statement of Operations and
Accumulated Deficit-Nine Month Period from
April 1, 1995 (Inception) to December 31, 1995.
(iv) Consolidated Statement of Cash Flows-Nine Month
Period from April 1, 1995 (Inception) to
December 31, 1995.
(v) Notes to Consolidated Financial Statements-
Period Ended December 31, 1995.
(2) Unaudited Financial Statements.
(i) Consolidated Balance Sheet as of June 30, 1996.
(ii) Consolidated Statement of Operations-Six Month
Period Ended June 30, 1996.
(iii) Consolidated Statement of Cash Flows-Six Month
Period Ended June 30, 1996.
(iv) Notes to Consolidated Financial Statements-
Six Months Ended June 30, 1996.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
None.
2
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DIGITAL TECHNOLOGIES MEDIA GROUP, INC.
--------------------------------------
(Registrant)
Date: October 15, 1996 By: /s/ ARTHUR NEWBERGER
-------------------------
Arthur Newberger
President
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JAY J. SHAPIRO, C.P.A.
A Professional Corporation
16501 VENTURA BOULEVARD
SUITE 650
ENCINO, CALIFORNIA 91436
TEL. (818) 990-4878 FAX (818) 990-4944
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Miller & Benson International, Ltd.:
I have audited the accompanying re-issued consolidated balance sheet of
Miller & Benson International, Ltd. (the "Company"), as of December 31, 1995,
and the related consolidated statements of operations, accumulated deficit and
cash flows for the nine-month period from April 1, 1995 (Inception) to December
31, 1995. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the re-issued consolidated financial statements referred
to above present fairly, in all material respects, the consolidated financial
position of the Company as of December 31, 1995, and the results of its
operations and its cash flows for the period April 1, 1995 to December 31,
1995, in conformity with generally accepted accounting principles.
Subsequent to April 2, 1996 it was discovered that the Company has a
significant liquidity problem caused by insufficient collections on accounts
receivable reflected on its books as of December 31, 1995. Accordingly, this
report has been re-issued on restated financial statements which reflect
uncertainty relative to the Company's continuance as a going concert - See
Note 1.
August 5, 1996 /s/ JAY J. SHAPIRO
-----------------------------------
Jay J. Shapiro, C.P.A.
A professional corporation
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MILLER & BENSON INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1995
ASSETS
Accounts receivable - net of $16,000 allowance
(Note 6) $ 20,300
Fixed assets - net of accumulated depreciation of $3,300 12,356
Film costs - net of accumulated amortization of $60,000 2,940,000
----------
TOTAL ASSETS $2,972,656
==========
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable $ 145,572
Other liabilities (Note 8) 107,000
Payroll tax obligations (Note 8) 32,817
Notes payable (Notes 5 and 6) 29,413
Unearned revenue 57,500
Royalties payable 60,000
----------
Total Liabilities 432,302
----------
Contingencies and commitments (Notes 1, 4, 5, 6 and 8)
STOCKHOLDERS' EQUITY (Notes 5, 6 and 7)
Capital Stock:
Common stock, $.01 par value authorized
250,000,000 shares; 5,401,127 shares
issued and outstanding (pro-forma basis) 3,439,717
Additional paid-in-capital 7,048
Preferred stock, $.01 par value authorized
100,000,000 shares, no shares outstanding 0
Accumulated deficit (906,411)
----------
Total Stockholders' Equity 2,540,354
----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $2,972,656
==========
5
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MILLER & BENSON INTERNATIONAL, LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
AND ACCUMULATED DEFICIT
NINE MONTH PERIOD FROM APRIL 1, 1995 (INCEPTION)
TO DECEMBER 31, 1995
Revenue $ 76,000
----------
Cost of Sales:
Film amortization (60,000)
Royalties (60,000)
----------
(120,000)
----------
Gross profit (loss) (44,000)
----------
Operating Expenses:
Administrative (260,966)
Payroll (Note 8) (155,397)
Travel & entertainment (63,085)
Professional fees (Note 7) (152,978)
----------
(632,426)
----------
Operating Loss (676,426)
Other (Expense) Income:
Interest expense (155,529)
Material reimbursement 544
Miscellaneous (Notes 7 and 8) (75,000)
----------
(229,985)
----------
Net Loss ($ 906,411)
==========
Accumulated Deficit 12/31/95 ($ 906,411)
==========
Loss per share (Note 3) ($0.17)
==========
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MILLER & BENSON INTERNATIONAL, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTH PERIOD FROM APRIL 1, 1995 (INCEPTION)
TO DECEMBER 31, 1995
Operating Activities:
Net Loss $ (906,411)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Depreciation and amortization 63,300
Provision for bad debts and discount
on long-term receivables 16,000
Accrued royalties payable 60,000
Provision for contingencies 207,000
Changes in operating assets and liabilities:
(Increase in:
Accounts receivable (36,329)
Increase in:
Unearned revenue 57,500
Accounts payable
and accrued expenses 115,546
----------
Net cash used by operating activities (423,394)
Investing Activities:
Purchase of business property (15,656)
----------
Net cash used in investing activities (15,656)
----------
Financing Activities:
Convertible debt issuance and conversion 275,000
Sale of common stock 129,950
Loans payable 34,100
----------
Net cash provided by
financing activities 439,050
----------
Increase in cash 0
Net cash - beginning of period 0
----------
Net cash - end of period $ 0
==========
Supplemental information:
Interest paid $ 155,529
==========
Income taxed paid 0
==========
Film costs of $3,000,000 were recognized upon CSI acquisition for a May, 1995
note of $3,000,000 which was subsequently converted to preferred stock in
November, 1995 and then common stock in May, 1996. Interest on the note of
$129,950 was reinvested in common stock on November 2, 1995. The Company
amortized $450,000 of this cost during the period.
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MILLER & BENSON INTERNATIONAL, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED DECEMBER 31, 1995
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION:
Digital Technologies Group, Inc. (the "Acquiree" or "DTG") was organized in
April, 1995 under the laws of the State of Delaware for the purpose of funding
the development of television programming and to interface with new
technologies. The Company initially issued 1,207,500 share of common stock with
a nominal value of $50.00 In May, 1995, DTG acquired certain assets of
Communications Services International ("CSI") for convertible debt. (See Note
2).
Miller & Benson International Ltd. (the "Company"), a Delaware corporation,
emerged from bankruptcy in 1991 and is a dormant holding company with 5,401,127
shares outstanding as of July 30, 1996 after a 1-for-100 stock split and
acquisition of DTG. The Company has no assets or outstanding liabilities. (See
Note 7).
COMPANY BUSINESS:
Effective with the consummation of the CSI asset acquisition DTG commenced
licensing in September, 1995 all acquired film rights in currently available
territories. The Company's customers consist of domestic and foreign
sub-distributors and sales agents and CSI will be collecting approximately
$50,000 in receivables for the Company subsequent to 12/31/95.
BASIS OF PRESENTATION:
The consolidated financial statements reflect the assets, liabilities, and
operations of DTG due to accounting treatment as reverse merger by DTG. (See
Note 7).
The balance sheets are presented in an unclassified format in accordance with
FAS No. 53.
GOING CONCERN:
As of December 31, 1995 the Company had no cash available to meet operating
requirements. This cash position is not adequate to meet the Company's needs.
The Company requires additional sales and collections to meet its 1996
operating needs and to satisfy the liabilities outstanding as of 12/31/95. The
Company's management is presently negotiating some major market licenses.
There can be no assurance of favorably consummating these negotiations at this
time.
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MILLER & BENSON INTERNATIONAL, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED DECEMBER 31, 1995
NOTE 1 (CONT'D)
GOING CONCERN (CONT'D):
Management believes that with major reductions in 1995 DTG operational costs
including approximately $350,000 of non-recurring items including a reserve for
unrecorded liabilities of $100,000, lower interest due to CSI note conversion,
and increased sales activity, the Company will be able to continue as a going
concern. However, at this time, there is substantial doubt regarding its
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
FILM REVENUE AND ROYALTY RECOGNITION:
Revenues from television license agreements are recognized as each film becomes
available for telecasting by the licensees. The Company defines availability
as when the films delivered are free of any conflicting licenses in respective
territory, and the licensee has fully accepted film materials. Royalty expense
is accrued based on earned revenue.
INCOME TAXES:
The Company may have limitations regarding the use of its apparent net
operating loss due to the transaction described in Note 7.
ACCOUNTS RECEIVABLE:
Accounts receivable consist of the unpaid portion of license agreements
received from customers on a worldwide basis. The Company's management
performs credit evaluations of customers and reserves for any potential credit
losses. The standard procedure when entering into a licensing agreement
requires a payment upon signing and the balance to be paid over a period
subsequent to delivery of films licensed. The evaluation of contracts as of
12/31/95 resulted in a $1.1 Million adjustment due to several significant
availability problems regarding the Company's lack of control of film inventory
without specific producer approval and customer acceptance of film product.
Such facts were discovered after April 12, 1996 and result in the re-issuance
of this report on restated consolidated financial statements.
FIXED ASSETS:
Depreciation of furniture and fixtures is being provided by utilization of the
straight-line method over the estimated useful lives of the assets is five
years.
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MILLER & BENSON INTERNATIONAL, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED DECEMBER 31, 1995
NOTES 1 (CONT'D)
As of December 31, 1995 fixed assets consist of:
Computer equipment $8,500
Other 7,156
--------------
15,656
Less accumulated depreciation ( 3,300)
--------------
$ 12,356
==============
FILM INVENTORY AND AMORTIZATION:
Film inventory principally consisting of distribution rights for a group of
television series are stated at the lower of unamortized cost or estimated net
realizable value.
Amortization is based on the income forecast method utilizing the relationship
of revenue realized in the period bears to estimated future revenue and the new
cost basis. Such estimated revenue will be revised periodically by management
and estimated losses, if any, will be provided for at that time. At December
31, 1995 as a result of DTG management's review and an independent film library
valuation of $4.3 million. The Company recognized $60,000 in amortization
expense.
During the next three years the Company anticipates amortizing 60% of its film
inventory balance.
NOTE 2 - CSI AGREEMENT:
On May 1, 1995 DTG concluded an Acquisition Agreement (the "Agreement") with
CSI, a foreign corporation formed in 1990 resulting in the acquisition of some
accounts receivable, film rights to several TV series, and a distribution
network for $3,000,000 secured convertible debenture bearing interest at 10%.
The entire payment was reflected as Film Cost based on an independent appraisal.
Interest of $150,000 was paid by CSI and such funds were reinvested into common
stock net of $20.500 outstanding receivable from CSI. On November 2, 1995, the
note was converted to convertible preferred stock with 6% dividend. On February
1, 1996 a dividend of $45,000 was paid to CSI and $30,000 was reinvested into
common stock. The preferred stock was converted to 3 million shares of common
stock of May 1, 1996. A 3% shareholder of CSI is now Chief Executive Officer of
the Company.
NOTE 3 - NET LOSS PER SHARE:
Net loss per share is computed using the pro-forma weighted average number of
shares of common stock outstanding December 31, 1995 assuming completion of the
DTG acquisition. (See Note 7).
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MILLER & BENSON INTERNATIONAL, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED DECEMBER 31, 1995
NOTE 4 - LEASE COMMITMENT:
The Company entered into a five-year lease agreement for 3,700 square feet of
office space with a term is beginning July 15, 1996. During 1995 DTG paid
$26,036 in rent expense and the minimum rent to be paid annually over the next
four years is $60,000. The Company is presently renegotiating the terms of the
lease with the landlord.
NOTE 5 - CONVERTIBLE SUBORDINATED DEBT AND WARRANTS EXERCISED:
The Company issued convertible debt amounting to $275,000 as of December 31,
995. Such debt, which is secured by receivables, is due through 12/1/96 and
bears an annual interest rate of 10%. The debtholders can convert their
obligation to Company's common stock at a price of $20.00 per share or 50% of
the initial offering price. Debtholders were also issued warrants to purchase
up to 50,000 shares of common stock at a cost of $.001 per share. All notes,
accrued interest and warrants, except for $20,313 were converted as of June 30,
1996 and retroactively reflected on these financial statements. (See Note 7).
NOTE 6 - STOCKHOLDER SETTLEMENTS
The Company entered into an agreement with a major stockholder for return of
800,000 shares held by him. The shares were cancelled effective December 31,
1995. Such agreement also provides for payment of past compensation net of
expense advances which have not been utilized and receivables were transferred
upon July 1996 foreclosure of a $25,000 note held by this stockholder. Another
stockholder is owed $9,100 at 12/31/95.
NOTE 7 - REVERSE ACQUISITION
Pursuant to a Stock Exchange Agreement dated June 28, 1996 among ("DTG"), the
shareholders of DTG and Miller & Benson International, Ltd. ("M&B"), M&B
acquired 100% of the outstanding capital stock of DTG in exchange for the
issuance of 4,000,000 post-split shares of common stock to DTG for its
shareholders and consultant and 401,127 shares of Company common stock to DTG
secured convertible subordinated debtholders ($301,127 including accrued
interest at conversion) and exchange for their outstanding warrant rights for
50,000 shares of DTG common stock. The 4,401,127 total shares of common stock
represented approximately 81.5% of the issued and outstanding shares of the
Company's common stock, which is the only class of the Company's equity
securities issued and outstanding. As a result, the former shareholders of DTG
may thus be deemed to have acquired control of M&B. For accounting purposes,
the acquisition of DTG by M&B has been treated as a recapitalization of DTG,
with DTG as the acquirer (reverse acquisition). All historical financial
statements prior to July 30, 1996 (closing) are those of DTG.
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MILLER & BENSON INTERNATIONAL, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED DECEMBER 31, 1995
NOTE 7 - (CONT'D)
M&B is a dormant public company whose activities during the past several years
have been limited to maintaining the corporate entity and evaluating business
opportunities. M&B's predecessor entity, Oil Securities, Inc., filed for
protection under Chapter 11 of the United States Bankruptcy Code on May 2, 1988
as debtor-in-possession. During the bankruptcy proceedings, M&B liquidated all
of its assets and settled or restructured all of its liabilities pursuant to a
plan of reorganization confirmed on June 25, 1991. In 1992 an Italian company
attempted an acquisition, but abandoned the transaction after a small
investment. On May 12, 1993, the bankruptcy proceedings were closed by the
entry of an order of final decree by the Bankruptcy Court. During the three
years ended December 31, 1995, M&B had no revenues, assets, or operations and
aggregate expenses of approximately $32,000. Most of the costs are reflected in
beginning accumulated deficit and such losses are not meaningful to any given
year. All M&B liabilities were discharged at closing by the sale to outside
parties of 166,667 share of Madera International common stock which was
obtained in exchange for 500,000 share of M&B common stock in June, 1996.
Madera shares were sold for $23,000 cash in July, 1996 and the funds paid all
M&B outstanding liabilities and approximately $20,000 for costs associated with
this pooling-in-interests transaction. M&B also issued 88,033 shares
to certain M&B officers with reimbursement of $1,550 for past advances to M&B.
Such shares have an imputed value of $7,000 and are reflected in additional
paid-in-capital.
The outstanding shares as of December 31, 1995 financial statements reflect all
M&B transactions as of that date and the consolidated financial statements have
been retroactively restated.
The Company changed its name to Digital Technologies Media Group, Inc. and CSI
is a 40% owner of the new company as of July 31, 1996. Digital Technologies
Entertainment Inc. ("DTE") is a wholly-owned subsidiary of the Company.
NOTE 9 - CONTINGENCIES:
The Company has accrued $50,000 relative to an asserted claim by the California
Franchise Tax Board for unpaid taxes including accrued interest and penalties
for the tax period ended December 31, 1984. The Company is attempting to settle
this claim at a lesser amount.
The Company is also involved in several lawsuits and disputes. The
consolidated financial statements reflect $52,000 relative to past DTG
employment benefit claims which are being appealed by the Company, and $5,000
for a lawsuit settled subsequent to December 31, 1995.
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MILLER & BENSON INTERNATIONAL, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED DECEMBER 31, 1995
NOTE 8 - CONTINGENCIES (CONT'D):
The Company is also delinquent relative to certain Federal and California
payroll tax obligations and such obligation increased to $51,000 as of June 30,
1996.
NOTE 9 - SALES BACKLOG (UNAUDITED):
The Chief Executive Officer of DTE believes that it has gross sales backlog of
approximately $1.5 Million. Such backlog is expected to generate 1996 sales
and related amortization and royalty expenses.
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MILLER & BENSON INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF JUNE 30, 1996
ASSETS
<TABLE>
<S> <C>
Cash $ 8,832
Accounts receivable - net 21,000
Fixed assets - net 11,056
-----------
40,888
-----------
Film library 3,000,000
Less accumulated
amortization (255,000)
-----------
2,745,000
-----------
Prepaid expenses 16,025
-----------
TOTAL ASSETS $ 2,801,913
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 137,059
Other liabilities 107,000
Payroll tax obligations 51,279
Notes payable 28,183
Unearned revenue 140,000
Royalties payable 101,000
-----------
564,521
-----------
STOCKHOLDERS' EQUITY:
Capital stock 3,439,717
Additional paid in capital 7,048
Accumulated deficit (1,209,373)
-----------
Total Equity 2,237,392
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,801,913
===========
</TABLE>
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MILLER & BENSON INTERNATIONAL, LTD.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTH PERIOD ENDED JUNE 30, 1996
<TABLE>
<S> <C>
REVENUE $ 288,000
---------
COST OF SALES:
FILM AMORTIZATION (195,000)
ROYALTIES (188,000)
---------
(383,000)
---------
GROSS PROFIT (LOSS) (95,000)
OPERATING EXPENSES (196,225)
---------
OPERATING LOSS (291,225)
---------
OTHER INCOME (EXPENSE)
INTEREST EXPENSE (15,063)
MATERIAL REIMBURSEMENT - NET 3,326
---------
(11,737)
---------
NET LOSS $(302,962)
=========
</TABLE>
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MILLER & BENSON INTERNATIONAL, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
SIX MONTH PERIOD ENDED JUNE 30, 1996
<TABLE>
<S> <C>
Operating Activities:
Net loss $(302,962)
Adjustments to reconcile
net loss to net cash provided
by operating activities:
Depreciation and amortization 196,600
Accrued royalties payable 41,000
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable, net (700)
Prepaid expenses (16,025)
Increase (decrease) in:
Accounts payable (8,513)
Payroll for obligations 18,462
Unearned revenue 82,500
---------
Net cash provided by operating activities 10,362
---------
Investing Activities:
Purchase of business property (300)
---------
Net cash used in investing activities: (300)
---------
Financing Activities:
Decrease in notes payable (1,230)
---------
Net cash used in financing activities (1,230)
---------
Increase in Cash 8,832
Net Cash - beginning of period 0
---------
Net Cash - end of period 8,832
=========
</TABLE>
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MILLER & BENSON INTERNATIONAL, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1996
1. Basis of Presentation
The accompanying consolidated financial statements are unaudited but,
in the opinion of management of the Company, contain all adjustments necessary
to present fairly the financial position at June 30, 1996, the results of
operations for the six months ended June 30, 1996, and the changes in cash
flows for the six months ended June 30, 1996. These adjustments are of a
normal recurring nature. The accompanying consolidated financial statements
include the operations of the Company and its wholly-owned subsidiary, Digital
Technologies, Inc. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Since Digital Technologies, Inc. was formed in April 1995 and did not
acquire its operating assets until May 1995, operations through June 30, 1995
were not significant. Accordingly, comparable 1995 financial statements are
not presented.
Certain information and footnote disclosures normally included in
financial statements that have been prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission, although
management of the Company believes that the disclosures contained in these
financial statements are adequate to make the information presented therein not
misleading.
The results of operations for the six months ended June 30, 1996 are
not necessarily indicative of the results of operations to be expected for the
full fiscal year ended December 31, 1996.
17
